Collusion-Proof Oracles for Decentralized Autonomous Organizations
Type
conference contribution
Date Issued
2023-05-05
Author(s)
Abstract
Blockchain based decentralized autonomous organizations (DAOs) rely on so called oracles to retrieve data from the outside world (off-chain). We develop a normative blueprint for incentive-compatible and collusion-proof oracles. Incentive compatibility can be achieved through staked tokens, a digital form of collateral that carries voting rights. Higher stakes stimulate additional effort, but increase the risk of collusion. To be inherently collusion proof, DAOs either require a high revenue or a sufficient degree of decentralization in combination with a large network size. If neither one of these conditions is fulfilled, collusion can be precluded by confiscating the stake of malicious actors based on stochastic voting and having voting power concentrated among a few key token holders.
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